TNAG-0788-FCO40-992-Development-of-social-policy-in-Hong-Kong-proposed-contribut-1978 — Page 297

Accident compensation schemes

9.10

As with the welfare allowance scheme, it has not been possible to calculate the level of compensation by a method comparable to that used in the public assistance scheme. In fixing the amounts payable for the death of a wage earner or a spouse where there are children, however, account was taken of the level of public assistance payable for an average sized family of five for a period of 18 months or 9 months, depending on the category of case. The amount of compensation is accordingly kept under review by reference to the scale of public assistance.

Sickness, injury and death benefit scheme

9.11

Under a contributory scheme, without any provision for the value of benefits to be maintained by special contributions from a Government or an employer, the money available to pay the benefits depends on the contributions paid, the success of the fund's investment policy and the structure of the scheme. If the scheme is designed to provide equivalent benefits for all members (as in a provident fund scheme or a retirement benefits scheme) the build-up of benefit rights is fairly slow since it is necessary to provide for the future claims of all members. If, on the other hand, the scheme is on the lines of group insurance - that is, only a minority of members will qualify because payment of benefit depends on a given circumstance such as sickness full benefits may be payable reasonably quickly. If the scheme is a "money purchase" scheme, the amount of benefit payable is determined solely by the individual contributions paid into the fund and the success of the fund's investment policy. In an "earnings- related" scheme, the amount of benefit is related to the earnings of the beneficiary; perhaps by reference to average salary during working life or to the average salary over the last five years or to the final year's salary.

9.12

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Because the proposed benefits are in lump sum form or payable for only a short period, arrangements for maintaining their value during the period of payment are not necessary. If benefits are related to recent earnings, this formula will provide an effective protection against inflation. It is a much more satisfactory approach than a formula under which benefit rights are built up in fixed money terms, ignoring changes in the value of money and the higher levels of earnings applying when the benefit comes to be paid.

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